"Fifteen percent would be terrific," said Joshua Bolten, president and CEO of the Business Roundtable, a business lobby that represents many of America's largest companies. "But it does not have to end up at 15 percent for Business Roundtable companies to be happy about it."
So what about the middle class? The wins for the rich and big business are already pretty clear. The picture for the middle class and small business owners is a lot murkier.
We don't know yet what the rates will be for the middle class — or what deductions will go away. An analysis over the summer by the Tax Policy Center, a nonpartisan think tank, found that about a quarter of middle-class households (those earning between $49,000 to $86,000) would see their tax bill rise under the plan, especially if popular deductions go away like the mortgage interest deduction and the state and local tax deduction.
Trump keeps arguing that lower corporate tax rates will be the biggest benefit of all for working people because they will usher in more jobs and more money. Conservative think tanks have been backing up those claims.
"Any reduction in the corporate tax will ultimately be passed on to workers," says Adam Michael, a tax policy analyst at the conservative Heritage Foundation.
Just about everyone agree something needs to be done to stop U.S. companies from going relocating overseas to lower their tax bills. But it's questionable whether slashing corporate tax rates will actually spur companies to use the extra cash on hand to pay workers more. That didn't happen after the 1986 tax revision under President Ronald Reagan. Weekly wages for rank and file types (non-managers) barely budged in the years that followed, according to data from the Labor Department.
It's also notable that the leaks indicate the top rate for small business owners (the "pass through rate") would fall from 39.6 to 25 percent. It's a sizable cut, but it means small businesses would still be paying more than American's biggest corporations, which might not sit well with voters.
If Trump and GOP lawmakers really wanted to help working people, they would need to do more than simply lower the rates. More than 45 percent of Americans, including many working poor, won't benefit from rate cuts because they don't earn enough money to owe any federal income taxes.
Trump's daughter Ivanka and GOP senators such as Marco Rubio (R-Fla.) have been pushing the expansion of refundable tax credits like the Child Tax Credit and Childcare Tax Credit to ensure the working poor get some benefit from this tax deal, too. Refundable tax credits allow families who work but don't owe federal income taxes to get a small amount of money back from the federal government. Without actions like that, a lot of lower middle class workers aren't going to get anything in this tax plan.
Instead of going with the "Ivanka option," GOP leaders appear to be opting to expand the standard deduction. They want to double it from its current rate of $6,350 for singles and $12,700 for married couples. That sounds great, except that it's not refundable, so it won't help Trump's working class base.
Much could change before Trump takes the podium on Wednesday, but so far, this does not look like a win for the middle class, especially the lower middle class.Source link